Where are the profits in the long tail?

Nicholas Carr over at his blog Rough Type points to a discussion about Chris Anderson's Long Tail theory: In his column in the Wall Street Journal today, Lee Gomes tries to debunk Chris Anderson's Long Tail theory, and on his Long Tail blog today, Anderson tries to debunk Gomes's debunking. One point of contention is Mr Anderson's assertion that sales in the long tail could be as much as 25 percent of sales in the head of the tail.

Nicholas Carr over at his blog Rough Type points to a discussion about Chris Anderson's Long Tail theory:

In his column in the Wall Street Journal today, Lee Gomes tries to debunk Chris Anderson's Long Tail theory, and on his Long Tail blog today, Anderson tries to debunk Gomes's debunking.

One point of contention is Mr Anderson's assertion that sales in the long tail could be as much as 25 percent of sales in the head of the tail. Using a music sales example, sales of "misses" can be substantial when compared to sales of "hits."

IMHO, the focus on sales of a product misses the point of the viability of the long tail. When talking about the *business* of the long tail profitablility has to be the key metric and not sales.

The long tail could do double duty in describing the rapid decline in profit margins in selling the long tail. The graph line might even be steeper if you consider the greater relative expense of marketing products to niche markets.

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I went to Mr Anderson's book launch last Thursday and had a quick chat and picked up a copy of the book but haven't read it yet. I had my copy signed to Matt, my 18-year old son.

I mentioned to Mr Anderson I was encouraged by the brevity of the book at some 200 pages. I said that many of us probably have about 150 pages we could write on a topic and stretching it to 200 pages instead of 400 to 500 pages was an encouragement to all.

Mr Anderson smiled and said that the magic number of words was 78,000! I'm making a note of that number.

The event was fun and the local in-crowd turned up for drinks and food at the hot (temperature) Varnish Gallery south of Market. Six Apart was the sponsor and Anil Dash VP at Six Apart introduced the event. However, the microphone failed during his rendition of a long anecdote. Ignoring the divine intervention in the proceedings, Mr Dash decided to continue on, using his natural vocal abilities :-)

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